Paying for Disaster

By
TD /
October 27, 1989

THE overall cost of the San Francisco earthquake is now estimated at $7.1 billion - making it the most expensive natural disaster in US history. How to finance disasters of this magnitude - especially in years where other crises (such as Hurricane Hugo) arise - is a question deserving more attention. So far the focus has been on Congress and federal aid. Even before specific damage assessments were made, Congress rushed through a $2.85 billion aid package. Most of that will go ``on budget'' - meaning that spending in other areas may end up being cut in order to pay for the disaster (though there is a sequester-loophole).

California Gov. George Deukmejian says that raising taxes in his state will be a ``last resort'' - used only if federal aid and state surplus aren't enough. He may quickly find the point of ``last resort.'' California's surplus is $1 billion, and Capitol Hill aides assume $2.85 billion is just a start. Since California is the state with the lowest gasoline tax (and most cars), Mr. Deukmejian ought to begin taxing at the pumps.

Americans should be able to count on the federal government for assistance at a time of crisis. Shared help is an American value. (Politicians know that to say anything less is suicidal.) Yet this value can't be taken for granted. Federal relief isn't the ``inalienable right'' one California congressman calls it. Increasingly, state and local governments must be prepared in case of multiple disasters. At a time when the federal budget shortfall is $141 billion, that may be one lesson to take from the earthquake. California's decade long tax revolt has given $7 billion a year back to citizens. But there's no ``rainy day'' money.

Yet, as irrepressible New York Sen. Daniel Patrick Moynihan says, the disaster may also be an opportunity. US highway infrastructure is ailing in every state, not just California. Senator Moynihan's 12-cent gas-tax proposal to refurbish roads is worth a second thought. A penny equals $1 billion. The job needs doing.